GATT Article XXIV

GATT Article XXIV

Territorial applications - Frontier Traffic - Customs Unions and Free-trade Areas

1. For the purposes of the GATT each customs union shall be treated as a contracting party.

2. A customs territory is a territory where separate tariffs or commercial regulations apply.

3. This agreement shall not prevent

a) special advantages given by a contracting party to another party aiming to facilitate trade

b) advantages given to the Free Territory of Trieste.

4. Customs unions and free trade areas are desirable, because they increase the freedom of trade. However, no such customs union or free trade area can create barriers to trade with the other contracting parties.

5. This agreement shall not prevent the formation of such customs unions or free trade areas given that

a) the duties and commercial regulations of the customs territory for the other contracting parties as a whole are not higher than the preexisting conditions of trade.

b) the duties and commercial regulations of the free trade area for the other contracting parties cannot be more restrictive than the corresponding regulations prior to the creation of the free trade area.

c) a plan of the formation of a customs union or free trade area is necessary to assure its applicability within a reasonable length of time.

6. If the creation of a customs union is proposing an increase in the rate of duties inconsistently with Article II, Article XXVIII applies.

7. a) if a contracting country enters a trade union or a free trade area it must notify the other contracting parties and provide information about the proposed trade union or free trade area.

b) the contracting parties can give recommendations to the party seeking to form a customs union or free trade area in order to facilitate the timely fulfillment of the plan of the formation of the union.

c) changes in the plan of formation of the customs union or free trade area must be communicated to the other contracting parties.

8. For the purposes of the GATT:

a) a customs union is a single customs territory for a number of preexisting customs territories.

b) a free trade area is a territory where all customs and commercial regulations are eliminated for products originated in the territory.

9. The preferences of paragraph 2 of Article I are not affected by the formation of a customs union or free trade area.

10. By two-thirds majority the contracting parties can approve the proposal of a customs union or free trade area.

11. The independent state of Pakistan and India should not be prevented from organizing special arrangements between them, as they previously constituted a single economic unit.

12. The contracting parties should introduce appropriate measures in their local authorities to ensure the fulfilment of this agreement.

The General Agreement on Tariffs and Trade 1947 http://www.wto.org/english/docs_e/legal_e/gatt47_02_e.htm 10/06/2010